According to StatisticBrain research institute, employee theft is a crime that costs U.S. businesses $50 billion annually. On a global scale, the Association of Certified Fraud Examiners reported that the median loss to businesses due to employee and executive fraud is $145,000- or an aggregated $3.7 trillion annually. More specifically, a study by global specialist insurer Hiscox found that the financial services sector had the highest level of losses due to employment fraud across all industries. In 2016 losses were over $120 million. How can these alarming figures be avoided to prevent future devastating losses to businesses?

Although the due diligence and background check sectors seem to be particularly straightforward in operations (find out all you can about a candidate, use that information to make a go/no go hire or investment decision), there are many more intricacies and complexities than meet the eye. With the continuous dynamic changes in political, technological, legal, cultural, and essentially all realms of society, information overload is inescapable.

Selecting a new employee to join a company is no easy feat for a hiring manager. In this overly pressurized, highly competitive marketplace, managers are under intense scrutiny to ensure that they hire top talent individuals from the marketplace. Moreover, managers in the U.S. face a network of intricate and overwhelming complexities when it comes to hiring laws and regulations. While it may be called the United States (emphasis on the United), most states are quite divided about their policies toward conducting background checks and pre screening hiring procedures. Let’s examine some of those differences and see how they affect the due diligence process.

Artificial Intelligence is unarguably changing your life whether you’re aware of it or not. Health care, cyber security, energy, finance, and tech are only a few of the infinite numbers of industries and ways in which AI is transforming society as we know it.

Although the Gig Economy is not a new concept in the U.S., it has seen some significant growth in the last few years, not surprisingly due to technological developments. According to a 2015 study by the American Action Forum, the number of workers in the gig economy grew from 8.8 percent in 2002 to 14.4 percent in 2014.

Furthermore, independent contract workers grew by 2.1 million people from 2010 to 2014. The growth of the gig economy is sure to have first hand effects on the employment sector in more than one way.

Facebook, Amazon, Wells Fargo. These are companies that you would expect hire only the best of the best. But while their brand names may carry elite associations, their compliance practices are anything but superior. In the wake of corporate scandals, the list of fraudulent activities never seems to end—and some of the top Fortune 500 companies are no exception to the rule. Over the past ten years, employers and screening firms have had to pay more than $325 million to settle background check (or lack thereof) lawsuits. In this new social era of transparency, there seems to be conflicting interests between corporate trust and corporate unjust.

Recent trends show that it’s easier than ever to create fictional companies and returns, among other collaborating materials. In fact, a few months ago the SEC produced a fraudulent site to highlight just how easy it is to present the illusion of an up-and-coming, promising investment.
It is for that reason, among others, that we argue the uptick in fraud is correlated with the proliferation of data. And it’s directly affecting your due diligence.